FDIC Issues Financial Institution Letter on Final Rule Regarding Assessments

The Federal Deposit Insurance Corporation ("FDIC") issued a Financial Institution Letter regarding the final rule on assessments, which revises the FDIC's risk-based deposit insurance assessment system to reflect changes in the regulatory capital rules.

The letter clarified that the final rule:

• conforms the capital ratios and ratio thresholds in the small-institution assessment system to the new prompt corrective action ("PCA") capital ratios and ratio thresholds recently adopted by the federal banking agencies;
• amends the assessment base calculation for custodial banks to conform to the asset risk weights adopted by federal banking agencies to the standardized approach in the new regulatory capital rules; and
• requires all "highly complex institutions" to measure counterparty exposure for assessment purposes using the Basel III standardized approach's credit equivalent amount for derivatives and its exposure amount for securities financing transactions.

The final rule will become effective on January 1, 2015, except for the incorporation of the supplementary leverage ratio and corresponding ratio thresholds into the definition of "capital evaluations," which will become effective on January 1, 2018.

See: FDIC Final Rule; Press Release.